Back to GetFilings.com
1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____ TO ____
ROWAN COMPANIES, INC.
Incorporated in Delaware Commission File I. R. S. Employer
Number 1-5491 Identification:
75-0759420
5450 Transco Tower
2800 Post Oak Boulevard, Houston, Texas 77056-6196
Registrant's telephone number, including area code: (713) 621-7800
Securities registered pursuant to Section 12(b) of the act:
Name of each exchange
Title of each class on which registered
- ------------------------------ ---------------------
Common Stock, $.125 Par Value New York Stock Exchange
Pacific Stock Exchange
11-7/8% Senior Notes due 2001 New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___.
The aggregate market value as of March 1, 1996 of the Common Stock
held by non-affiliates of the registrant was approximately $922 million.
The number of shares of Common Stock, $.125 par value, outstanding at
February 28, 1996 was 85,017,535.
DOCUMENTS INCORPORATED BY REFERENCE
Document Part of Form 10-K
-------- -----------------
Annual Report to Stockholders for
fiscal year ended December 31, 1995 Parts I, II and IV
Proxy Statement for the 1996 Annual
Meeting of Stockholders Part III
2
TABLE OF CONTENTS
PART I Page
Item 1. Business .................................................... 1
Drilling Operations................................................. 1
Offshore Operations ............................................. 2
Onshore Operations .............................................. 3
Contracts ....................................................... 4
Competition ..................................................... 4
Regulations and Hazards ......................................... 6
Manufacturing Operations............................................ 7
Raw Materials.................................................... 8
Competition...................................................... 8
Regulations and Hazards.......................................... 9
Aircraft Operations ................................................ 10
Contracts ....................................................... 11
Competition ..................................................... 11
Regulations And Hazards ......................................... 12
Employees .......................................................... 12
Item 2. Properties .................................................. 13
Drilling Rigs ...................................................... 13
Manufacturing Facilities............................................ 17
Aircraft ........................................................... 17
Item 3. Legal Proceedings ........................................... 18
Item 4. Submission of Matters to a Vote of Security Holders ......... 18
Additional Item. Executive Officers of the Registrant ................ 18
Part II
Item 5. Market For Registrant's Common Stock and Related
Stockholder Matters ....................................... 20
Item 6. Selected Financial Data ..................................... 20
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................... 20
Item 8. Financial Statements and Supplementary Data ................. 20
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure ....................... 20
Part III
Item 10. Directors and Executive Officers of the Registrant .......... 20
Item 11. Executive Compensation ...................................... 20
Item 12. Security Ownership of Certain Beneficial Owners
and Management ............................................ 21
Item 13. Certain Relationships and Related Transactions .............. 21
Part IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K ....................................... 21
3
PART I
ITEM 1. BUSINESS
Rowan Companies, Inc.(the "Company"), organized in 1947 as a Delaware
corporation and a successor to a contract drilling business conducted since
1923 under the name Rowan Drilling Company, Inc., is engaged principally in the
contract drilling of oil and gas wells in domestic and foreign areas. As noted
below, it also provides aircraft services and, since early 1994, has operated a
mini-steel mill, a heavy equipment manufacturing plant and a marine rig
construction yard through the purchase of the net assets of Marathon LeTourneau
Company.
Offshore operations of the Company consist primarily of contract
drilling services utilizing mobile rigs, principally a fleet of 20
self-elevating drilling platforms ("jack-up rigs"), including three heavy duty
cantilever jack-up rigs ("Gorilla Class rigs"). See "DRILLING OPERATIONS"
below for information with respect to the construction of an enhanced version
of the Company's Gorilla Class jack-ups. In 1992, the Company began providing
Total Project Management, an approach to drilling operations which emphasizes
drilling and completing wells on a turnkey basis, and offshore platform
installation and removal services.
In February 1994, the Company purchased through its wholly-owned
subsidiary, LeTourneau, Inc., the net assets of Marathon LeTourneau Company.
LeTourneau, Inc. operates a mini-steel mill that recycles scrap and produces
alloy steel and steel plate; a manufacturing facility that produces heavy
equipment for the mining, timber and transportation industries including, among
other things, front-end loaders up to 50 ton capacity and trucks up to 240 ton
capacity; and a marine group that has built over one-third of all mobile
offshore jack-up drilling rigs, including all 20 operated by the Company and,
as noted below in "DRILLING OPERATIONS," will construct an enhanced Gorilla
Class jack-up rig for the Company at its shipyard.
The Company's wholly-owned subsidiary, Era Aviation, Inc., provides
contract and charter helicopter and fixed-wing aircraft services, with its
fleet consisting on March 29, 1996 of 86 helicopters and 19 fixed-wing
aircraft. The Company's aircraft services include flightseeing, medivac
transportation, forest fire control and support for oil and gas related
operations out of its primary bases in Alaska, Louisiana and Nevada. In
addition, the Company provides airline services in Alaska using its fixed-wing
aircraft. Since 1991, the Company has owned a 49% interest in a Dutch-based
joint venture company, KLM ERA Helicopters B.V. ("KLM ERA"), which owns a fleet
consisting of 13 helicopters in the Dutch and British sectors of the North Sea.
Information regarding revenues, operating profit, identifiable assets
and export sales of the Company's industry segments and foreign and domestic
operations for each of the three years in the period ended December 31, 1995 is
incorporated by reference herein and provided in Footnote 10 of the Notes to
Consolidated Financial Statements on pages 25 and 26 of the Company's Annual
Report to Stockholders for the fiscal year ended December 31, 1995 ("Annual
Report"), incorporated portions of which are filed as Exhibit 13 hereto.
In the years 1993, 1994 and 1995, the Company had revenues from
individual customers representing 10% or more of consolidated revenues as
follows: Phillips Petroleum Company - 17% for 1993; and AMOCO Corp. - 10% and
11% for 1994 and 1995, respectively. Such revenues were primarily from
drilling operations.
DRILLING OPERATIONS
In 1995, drilling operations generated an operating profit (income
from operations before deducting general and administrative expenses) of
$5,019,000.
-1-
4
Offshore Operations
At December 31, 1995, the Company's drilling fleet consisted of 20
deep-water jack-up rigs (eight conventional and twelve cantilever, including
three Gorilla Class rigs in the latter category) and one semi-submersible rig.
The Company owns all of the rigs comprising its fleet except for two cantilever
jack-up rigs leased under sale/leaseback arrangements expiring in 1999 and
2000. In the fourth quarter of 1995, the Company completed the sale of its
three submersible barge rigs.
On April 28, 1995, the Company announced plans for the design and
construction of Rowan Gorilla V, an enhanced version of the Company's Gorilla
Class jack-ups, which will be the world's largest bottom supported mobile
offshore drilling unit. The rig will be able to operate year-round in 400 feet
of water south of the 61st parallel, within the worst case combination of
100-year storm criteria for waves, wave periods, winds and currents. At March
29, 1996, the design was virtually complete. Construction, which is currently
underway, will be carried out at LeTourneau's Vicksburg, Mississippi shipyard
and is expected to be completed by mid-1998 at an estimated cost of $170
million. This project represents the Company's first new construction since a
major drilling rig expansion program was conducted in the early to mid-1980s.
In the intervening years, the Company's capital expenditures have been primarily
for improvements to existing drilling rigs and the purchase of aircraft. Adding
to these capital expenditures were the purchases of the 49% interest in KLM ERA
and the net assets of Marathon LeTourneau in 1991 and 1994, respectively. For a
discussion of the Company's availability of funds in 1996 for future operations
and for estimated capital expenditures, including those related to the
reactivation of the Company's marine construction capability and the initial
construction phase of Gorilla V, see "Liquidity and Capital Resources" under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on page 14 of the Annual Report, which information is incorporated
herein by reference. Also, see ITEM 2. PROPERTIES on page 13 of this Form 10-K
for additional information with respect to the operating status of the Company's
rigs.
The Company's existing Gorilla Class rigs are a heavier class of
jack-up rig, intended to drill up to 30,000 feet in water depths up to 328 feet
in extreme hostile environments (winds up to 100 miles per hour and seas up to
90 feet). Each Gorilla Class rig is equipped with a "top-drive", a drilling
system costing approximately $1.25 million which assists in faster drilling
while reducing the hazard of the drill string sticking, and is particularly
advantageous in the case of horizontal drilling.
Of the Company's other jack-up rigs, six Class 116-C rigs and one
Class 116 rig have been modified to provide (but to a lesser extent than
Gorilla Class rigs) the capability of operating in hostile environments. The
Company's nine Class 116-C jack-up rigs, two Class 116 jack-up rigs, two Class
84 jack-up rigs, one semi-submersible rig and two of its four Class 52 jack-up
rigs have been equipped with top-drive drilling systems.
In 1989, the Company acquired a patent (U.S. Patent No. 4,103,503)
applicable to the transfer of a drilling rig substructure from a jack-up type
drilling unit to a fixed platform. In conjunction with technology contained in
the patent, the Company has developed additional substructure transfer or "skid
base" technology which has allowed the Company's conventional jack-up rigs to
work over wells on a production platform that heretofore required a cantilever
jack-up or platform rig. At March 29, 1996, two Class 116 jack-up rigs, two
Class 84 jack-up rigs and one of its Class 52 jack-up rigs have been equipped
with skid base units.
In 1992, the Company purchased a 550-ton ABS certified crane and
formed a new subsidiary for conducting offshore platform installation and
removal services. Utilizing the skid base technology discussed above, the
drilling package on a jack-up rig can be skidded off to allow the heavy-lift
crane to be skidded on, thereby transforming the unit into a crane barge or,
reversing the process, transforming the unit back into a drilling rig. The
Company has a patent (U.S. Patent No. 5,388,930) to cover such technology. At
March 29, 1996, one Class 52 jack-up rig had been modified to provide this dual
purpose capability and is able to operate in water depths up to 250 feet.
The Company's four class 116-C rigs presently located in the North Sea
continue to undergo modifications in order to meet new offshore safety
standards being
-2-
5
implemented in the United Kingdom. Some of the safety standards under
government consideration, many of which the Company has already modified its
North Sea rigs to meet, are as follows: a minimum of two independent sources of
sea water for firefighting; a temporary safe refuge for personnel near the
escape capsules which will provide a high degree of protection from fire, smoke
and gas inhalation and will contain additional safety, communication and
survival gear; additional enclosed motorized escape capsules; and expanded
smoke and gas protection in the crew quarters. Because of market weakness in
the North Sea, particularly in the years 1992-1994, the Company moved drilling
rigs to other markets during that period as follows: one Gorilla Class jack-up
in 1992 and another in 1994, one Class 116-C jack-up in 1992 and one Class 116
jack-up in 1992.
Since 1970, the Company has pursued a policy of concentrating on
jack-up rigs. Jack-ups are utilized for both offshore exploratory and
development drilling and, in certain areas, for well workover operations. The
Company operates larger deep-water type jack-up rigs capable of drilling to
depths of 20,000 to 30,000 feet in maximum water depths ranging from 225 to 450
feet, depending on the size of the rig and its location. A jack-up rig
consists of a floating hull with three independent elevating legs. The
Company's rigs are equipped with propulsion thrusters to assist in towing. The
entire drilling unit, consisting of the drilling rig, supplies, crew quarters,
loading and unloading facilities, helicopter landing deck and other related
equipment, is mounted on the hull. At the drilling site, the legs are lowered
until they penetrate the ocean floor, and the platform hull is jacked up on the
legs to the desired elevation above the water. The platform hull then serves
as a drilling platform until the well is completed and the operation is
reversed by lowering the platform hull into the water and towing it to the next
drilling site. The cantilever feature contained on the Company's newer
jack-ups provides for the extension of the portion of the drilling platform
containing the drilling rig over fixed production platforms so that the
drilling rig may be utilized to perform development or workover operations on
the platforms with a minimum of interruption to production.
The Company's semi-submersible rig is utilized principally for
offshore exploratory drilling from a floating position in waters to depths of
1,200 feet. A semi-submersible drilling rig consists of a drilling platform
raised above multiple hulls by columns. The hulls are flooded so as to be
submerged beneath the surface, in which position the rig is anchored during
drilling operations. The same type of equipment which is contained on a jack-up
rig is mounted on the drilling platform. After completion of the well, the
submerged hull is deballasted to reduce vessel draft and facilitate towing,
assisted by its own thrusters, to another drilling location.
Onshore Operations
The Company has drilling equipment, personnel and camps available on a
contract basis for exploration and development of onshore areas. It currently
owns 17 land rigs located as follows: deep-well rigs - four in the Anadarko and
Permian basins of Oklahoma and Texas, one in Southeast Texas, two in Louisiana,
and two in Argentina; winterized rigs - five in Alaska; and trailer-mounted
rigs - three in Argentina.
Over the period 1991-1995, the drilling areas providing the greatest
amount of activity for the Company's land rigs have been Venezuela and
Argentina. Between mid-1991 and mid-1994, five of the Company's rigs carried
out a three-year drilling contract in Venezuela and were then returned to the
United States where three of the five had sporadic work in the second half of
1994. Three of these rigs were moved to Argentina in March 1995 to perform a
two-year drilling contract. Two deep-well land rigs were also moved to
Argentina in 1995 - one in May and the other in August. Except for two
deep-well land rigs that have worked fairly consistently in Texas, Mississippi
and Louisiana since mid-1994, and one winterized land rig in Alaska that worked
in the first quarter of 1992, another that worked in the first quarter of 1993
and another that worked for most of the first four months of 1994, the
deep-well land rigs based in Texas, Oklahoma, Louisiana and Alaska have been
idle since mid-1988 due to inadequate rates. Accordingly, seven of the
Company's land rigs remained "mothballed" at March 29, 1996. The cost of
maintaining these rigs is modest and the remaining investment in the rigs is
not significant.
The drilling equipment comprising an onshore rig consists basically of
engines, drawworks or hoist, derrick, pumps to circulate the drilling fluid,
drill pipe and
-3-
6
drilling bits. The type of rig required by a customer depends upon the
anticipated well depth, terrain and conditions in the drilling area.
Contracts
The Company's policy with regard to day rates and contract durations
depends upon the prevailing strength or weakness of the market. During periods
when the offshore rig markets are weak and declining rates prevail, the Company
generally pursues a policy of entering into lower rate contracts to remain in a
competitive position and to offset the substantial cost of maintaining and
reactivating stacked rigs. During those times when the markets are strong and
increasing rates prevail, the Company's policy is generally one of negotiating
short rather than long-term contracts for its offshore rigs because such policy
allows the Company to maximize its ability to obtain the benefit of rate
increases and to pass through cost increases to customers.
The Company's drilling contracts are obtained either through
competitive bidding or individual negotiations. Rates obtained depend upon the
type of equipment used, its availability and its location, as well as the type
of operations involved. Both offshore and onshore contracts for use of the
Company's drilling equipment are "well-to-well", "multiple well" or, except for
work done on a turnkey basis, for a fixed term generally ranging from four to
twelve months. Well-to-well contracts are cancelable at the option of either
party upon completion of drilling at any one site, and fixed-term contracts
customarily provide for termination by either party if drilling operations are
suspended for extended periods by events of force majeure. While most current
fixed-term contracts are for relatively short periods, some fixed-term and
well-to-well contracts continue for a longer period than the original term or
for a specific series of wells. Contracts, particularly those for offshore
operations, generally contain renewal or extension provisions exercisable at
the option of the customer at prices mutually agreeable to the Company and the
customer and, in many cases, provide for additional payments for mobilization
and demobilization. Most of the Company's drilling contracts in the North Sea
are well-to-well contracts or short-term contracts of similar duration lasting
60-120 days, while most of the Company's contracts in the Gulf of Mexico are
well-to-well contracts lasting 30-45 days.
The Company's drilling contracts, other than those for work done on a
turnkey basis, provide for drilling compensation on a day rate basis. In the
case of contracts for work done on a turnkey basis, the Company's compensation
is contingent on the Company successfully drilling a well to a specified depth
for a fixed price. In the event certain operational problems occur which cause
the Company to be unable to reach the specified turnkey depth, the Company may
not be entitled to any portion of the turnkey price thereby causing it to
absorb substantial out-of-pocket expenses. For this reason, wells drilled on a
turnkey basis generally involve greater economic risk to the Company than
wells drilled on a day rate basis. Contracts for work in foreign countries
generally provide for payment in United States dollars except for minimal
amounts required to meet local expenses.
Contracts for platform installation and removal services typically
contain the same types of provisions and features described herein for drilling
contracts.
The Company believes that the contract status of its onshore and
offshore rigs is more informative than backlog calculations, and that backlog
information is neither calculable nor meaningful given the cancellation options
contained in, and the short duration of, fixed-term contracts and the
indeterminable duration of well-to-well and multiple well contracts. See ITEM
2. PROPERTIES on page 13 of this Form 10-K for the contract status of rigs as
of March 29, 1996.
Competition
The Company encounters continual competition in securing domestic and
foreign drilling contracts from approximately 36 offshore drilling contractors
operating or having available to operate about 527 mobile rigs, approximately
14 major domestic drilling contractors operating or having available to operate
about 50 land rigs in the deep-well market in the Permian and Anadarko Basins,
and five domestic drilling contractors operating or having available to operate
about 21 winterized land rigs on the Alaskan North Slope. The Argentina land
rig market is currently in a state of expansion, thereby causing the number of
contractors and rigs to be indeterminable.
-4-
7
Some of the Company's competitors with greater financial and other resources
may be in a better position than the Company to make the continuous capital
investments required to make technological improvements to existing equipment
or to replace equipment that becomes obsolete. Furthermore, a few of the
Company's competitors have been substantially relieved of debt burdens by
bankruptcy proceedings.
Technological advances in equipment, particularly offshore equipment,
may cause older equipment having lower capital costs to be less suitable for
some proposed drilling operations. As a result, the Company has employed the
following strategy: over the 1980-1986 period - carried out a drilling rig
expansion program, including the development of the heavier jack-up rig class
known as the Gorilla rig; 1987 through the present - engaged in a drilling rig
modification program designed to provide the Company's fleet with jack-ups
reflecting recent technological advancements and which generally meet known
government-imposed safety and pollution control requirements; and in 1995 -
began the development of the design and the construction plans for a drilling
rig which will be an enhanced version of the Gorilla Class rig. The Company is
in the final stages of development with construction beginning in earnest in
the second quarter of 1996.
The offshore markets in which the Company competes are chosen on the
basis of those which offer the greatest market potential and are generally
located in the more politically stable areas of the world. Accordingly, since
1989 the Company has moved drilling rigs from one offshore market to another as
follows: one Class 116-C jack-up rig from the North Sea to Southeast Asia in
1990 and then to Alaska in 1993; one Gorilla Class rig from the Gulf of Mexico
to offshore eastern Canada in 1990; one Class 116 jack-up rig from the Gulf of
Mexico to the North Sea and back to the Gulf of Mexico, both in 1992; one Class
116-C jack-up rig from the North Sea to the Gulf of Mexico in 1992; one Gorilla
Class rig from the North Sea to Trinidad in 1992 and then to the Gulf of Mexico
in 1995; one Class 52 jack-up rig from the Gulf of Mexico to Colombia in 1992
and back to the Gulf of Mexico in 1993; one class 116-C rig from Alaska to the
Gulf of Mexico in 1994; and one Gorilla Class rig from the North Sea to the
Gulf of Mexico in 1994 and then to Trinidad in 1995. Relocation of drilling
rigs from one geographic location to another is dependent upon changing market
dynamics with moves occurring only when the likelihood of higher returns makes
such action economical. At March 29, 1996, 14 jack-ups were located in the
Gulf of Mexico, four jack-ups were located in the North Sea, one jack-up was
located offshore eastern Canada, one jack-up was located offshore Trinidad, and
one semi-submersible rig was located in the Gulf of Mexico.
A number of factors affect a drilling contractor's ability both
onshore and offshore to obtain contracts at a profitable rate within an area.
Such factors include the location and availability of equipment, its
suitability for the project, the comparative cost of the equipment, the
competence of personnel and the reputation of the contractor. The ability to
obtain a profitable rate of return is also dependent upon receiving adequate
rates to compensate for the added cost of moving equipment to drilling
locations. See "Contracts" beginning on page 4 of this Form 10-K concerning
the pricing policies pursued by the Company under various market conditions.
The Company markets its drilling services by directly contacting
present and potential customers, including large international energy
companies, many smaller energy companies and foreign government-owned or
controlled energy companies. Downsizings by major energy companies, coupled
with the significant reductions of exploration by such companies in offshore
U.S. waters, have resulted in the Company adapting its marketing efforts to
increase emphasis on independent operators. Because the exploration activities
of the Company's present and potential customers are impacted by state, federal
and foreign regulations associated with the production and transportation of
oil and gas, the demand for the Company's drilling services is impacted
accordingly.
In the case of offshore platform installation and removal services,
the Company competes against approximately 11 contractors operating or having
available to operate about 23 mobile derrick barges in the Gulf of Mexico
market. Because the Company is a relatively new entrant in this field, many of
the Company's competitors have the advantage of having offered these services
for a longer period of time, including the benefits of established
technological know-how and more extensive customer bases.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 12 through 14 of the Annual Report, the
information under which
-5-
8
caption is incorporated herein by reference, for a discussion of current
industry conditions and their impact on operations.
Regulations and Hazards
The offshore and onshore operations of the Company are subject to many
hazards. In the drilling business, inherent hazards include blowouts and well
fires, which could cause personal injury, suspend drilling operations,
seriously damage or destroy the equipment involved and cause substantial
damage to producing formations and the surrounding areas. Offshore drilling
operations and platform installation and removal operations are also subject to
the hazards incident to marine operations, either on site or while under tow,
such as capsizing, collision or grounding. Raising and lowering the legs of
jack-up rigs into the ocean bottom and ballasting semi-submersible units
require skillful handling to avoid capsizing or other serious damage. Drilling
deviated holes into high pressure formations is a complex process and problems
frequently occur. The process of removing platforms and caissons using
underwater explosives involves substantial risks and requires a significant
amount of skill in order to confine the resulting destruction to the intended
areas.
The Company believes that it is adequately insured for physical damage
to its rigs, and for marine liabilities, workers compensation, Maritime
Employees Liability, automobile liability and for various other types of
exposures customarily encountered in providing the Company's services. Certain
of the Company's liability insurance policies specifically exclude coverage for
fines, penalties and punitive or exemplary damages. Under current conditions,
the Company anticipates that its present insurance coverage will be maintained,
but no assurance can be given that insurance coverage will continue to be
available at rates considered reasonable, that self-insured amounts or
deductibles will not increase or that certain types of coverage will be
available at any cost.
Foreign operations are subject to certain political, economic and
other uncertainties not encountered in domestic operations, including risks of
expropriation of equipment as well as expropriation of a particular energy
company operator's property and drilling rights, taxation policies, customs
restrictions, currency rate fluctuations and the general hazards associated
with foreign sovereignty over certain areas in which operations are conducted.
The Company attempts to minimize the risk of currency rate fluctuations by
generally denominating contract payment terms in United States dollars.
Many aspects of the operations of the Company are subject to
government regulation, including those relating to equipping and operating
vessels, drilling practices and methods and the level of taxation. In
addition, various countries (including the United States) have regulations
relating to environmental protection and pollution control affecting drilling
operations. Recent events have also increased the sensitivity of the oil and
gas industry to environmental matters. The Company may be liable for damages
resulting from pollution of offshore waters and, under United States
regulations, must establish financial responsibility. Generally, the Company
is substantially indemnified under drilling contracts compensated on a day rate
basis from pollution damages, except in certain cases of pollution emanating
above the surface of land or water from spills of pollutants, or in the case of
pollutants emanating from the Company's drilling rigs, but no assurance can be
given regarding the enforceability of such indemnification provisions.
In performing a contract for work done on a turnkey basis, the Company
is normally responsible for certain risks that would customarily be assumed by
the customer under a contract compensated on a day rate basis. These risks
include liability for pollution resulting from a blowout or uncontrolled flow
from the well bore, an underground blowout, the cost of controlling a wild well
and the expense to redrill a well which has blown out. The Company carries
insurance to cover such risks and generally obtains an indemnity from its
customers with respect to liabilities exceeding the amount of insurance carried
by the Company.
The Company believes that it complies with all material legislation
and regulations affecting its operations in the drilling of oil and gas wells,
and in controlling the discharge of wastes. To date the Company has made
significant modifications to its rigs located in the Gulf of Mexico in order to
reduce waste and rain water discharge from such rigs and believes that it could
operate those rigs at
-6-
9
"zero discharge" without material additional expenditures. Other than these
expenditures and those relating to the previously discussed United Kingdom
safety standards, compliance has not, to date, materially affected the capital
expenditures, earnings or competitive position of the Company, although these
measures add to the costs of operating drilling equipment in some instances,
and in others they may operate to reduce drilling activity. Further
legislation or regulation may reasonably be anticipated, but the effects
thereof on operations cannot be predicted.
The Company is subject to the requirements of the Federal Occupational
Safety and Health Act ("OSHA") and comparable state statutes. The OSHA hazard
communication standard, the Environmental Protection Agency "community
right-to-know" regulations under Title III of the Federal Superfund Amendment
and Reauthorization Act and comparable state statutes require the Company to
organize and report certain information about the hazardous materials used in
its operations to employees, state and local government authorities and local
citizens.
MANUFACTURING OPERATIONS
In 1994, LeTourneau, Inc. ("LeTourneau"), a wholly-owned subsidiary of
the Company, acquired the net assets of Marathon LeTourneau Company, which is
headquartered in Longview, Texas. As more fully described below, LeTourneau
operates a manufacturing facility that produces heavy equipment, a mini-steel
mill that recycles scrap and produces steel plate and forging ingots and a
marine group that has built over one-third of all mobile offshore jack-up
drilling rigs, including all 20 operated by the Company. The Company holds a
number of patents on its inventions and the "LeTourneau" name is considered to
be significant to its manufacturing operation.
The mining equipment product line of LeTourneau includes off-road
trucks with capacities of 190, 200 and 240 tons and loaders with bucket
capacities of 17, 22, 28 and 33 cubic yards. LeTourneau's loaders and trucks
are generally used in coal, gold, copper, iron ore and other mines. Both the
loaders and the trucks utilize the LeTourneau diesel electric-drive systems
with solid state controls. The primary benefit of the diesel electric-drive
system is to allow large, mobile equipment to stop, start and reverse without
gear shifting and high maintenance braking. LeTourneau loaders can load
LeTourneau rear-dump trucks and competitive trucks in the 85 ton to 240 ton
size range. LeTourneau's mining equipment and parts are distributed through a
world-wide network of independent distributors and a Company-owned distribution
network serving the Western United States.
The forestry equipment product line includes diesel electric powered
log stackers having either two or four wheel drive configurations with load
capacities ranging from 35 to 65 tons. LeTourneau is the only manufacturer
that sells electrically powered jib cranes with ratings from 25,000 to 52,000
lbs. at a reach of 100 to 150 feet and having a 360 degree rotation. The
forestry equipment is marketed primarily in North America through independent
distributors and a Company-owned distribution network in the Northwestern
United States.
LeTourneau's material handling equipment line includes several
different types of intermodal equipment. These include 50 ton capacity, diesel
electric, gantry cranes and large forklift type vehicles, called side porters,
used for lifting, transporting and stacking large shipping containers and
trailers at ports and rail yards. Gantry cranes equipped with a spreader can
lift containers from the top and also have retractable arms which are used in
loading and unloading piggyback trailers. Gantry cranes can span up to seven
rows plus a truck aisle and stack 9 ft. 6 inch containers up to five high. The
intermodal equipment is marketed primarily in North America through independent
distributors and a Company-owned distribution network in the Northwestern
United States.
LeTourneau also sells parts and components to repair and maintain
mining, forestry and intermodal equipment. Equipment parts are marketed
through one dealer and a Company-owned distribution network in the United
States with 17 parts stocking branches, one dealer in Canada with over 19 parts
stocking branches, and 31 international dealers with over 50 parts stocking
locations.
LeTourneau's mini-steel mill located in Longview, Texas produces
carbon, alloy and specialty steel plate products. LeTourneau concentrates on
"niche" markets
-7-
10
that require alloy, specialty steel grades, or "exotic" versions of carbon
steel products including mold steels, tool steels, aircraft quality steels, 400
series stainless steel and hydrogen induced crack resistant steels. External
steel sales, which are garnered through a direct sales force of LeTourneau
employees, consist primarily of steel plate, but also include forging ingots
and value-added fabrication of steel products. Steel products are generally
sold to steel service centers, fabricators, manufacturers, forge shops and
brokers. The market for carbon steel plate products and fabricated products is
regional and encompasses Texas, Oklahoma, Louisiana, Mississippi and Arkansas.
LeTourneau ships alloy and specialty grades of plate products nationally and
exports quantities to Mexico and Canada. The forging ingot market is
concentrated in the Gulf Coast region of Texas. Carbon and alloy plate
products are also used internally in the production of heavy equipment and
parts.
LeTourneau has a shipyard in Vicksburg, Mississippi for the
construction of mobile self-elevating offshore drilling platforms. LeTourneau
also has the capability of providing engineering support and spare parts to the
drilling industry. With the announcement of the construction of Rowan Gorilla
V in April 1995, the Company began a $20 million rebuilding of this facility
which had previously been closed. The yard is expected to employ about 350,
most of whom will be newly hired. Ongoing rig component manufacturing and
marine repair service businesses, as well as a marine design engineering
business, have been and continue to be located at the Company's Longview, Texas
facility.
In 1995, manufacturing operations generated an operating profit
(income from operations before deducting general and administrative expenses)
of $11,737,000 and had a firm backlog for all of its product lines at
March 1, 1996 of $51,264,000.
LeTourneau engages in a limited amount of research and product
development, primarily to increase the capacity of and provide innovative
improvements to the product lines. The Company evaluates on an ongoing basis
the LeTourneau product and service lines with the intention of making
enhancements.
Raw Materials
The principal raw material utilized in LeTourneau's manufacturing
operations is steel plate, most of which is supplied by LeTourneau's mini-steel
mill. Other required materials are generally available in sufficient
quantities through purchases in the open market to meet its manufacturing
needs. LeTourneau does not believe that it is dependent on any single
supplier.
Competition
LeTourneau's large trucks and loaders compete worldwide with several
competitors. The Company believes it is the third or fourth largest supplier of
this size and type of equipment in the world. The loader market also includes
vigorous competition from smaller-sized equipment. Large loaders compete
against four manufacturers of loaders and the electric mining shovels and
LeTourneau trucks compete against three manufacturers.
The market for LeTourneau forestry and intermodal equipment is also
characterized by vigorous competition. Even though LeTourneau's jib crane is
unique, it does encounter competition from other equipment manufacturers that
offer alternate methods for meeting the requirements. The number of major
competitors by type of equipment are as follows: log stackers - four, jib
cranes - three, side porters - six and gantry cranes - more than ten.
LeTourneau's mini-steel mill encounters competition from a total of
eight major competitors, with the breakdown by product line being as follows:
plate products - four; fabricated products - two and forging ingots - two.
The competition LeTourneau encounters in the parts business is
extremely fragmented with only three other companies being considered to be
competitors. Vendors supplying parts directly to end-users and well-fitters
who obtain parts and copy them to supply less expensive and lower quality
substitutes represent more intense competition than that of direct competitors.
-8-
11
In order to be competitive in the mining and forestry heavy equipment
markets, LeTourneau offers warranties at the time of purchase as well as parts
guarantees. Warranties, which are based upon stipulated periods of ownership or
hours of usage, whichever occurs first, generally cover the drive train and, in
the case of LeTourneau trucks, cover the frame. Parts consumption guaranties
and maintenance and repair contracts are also made on the same basis.
LeTourneau pursues a parts return policy, which provides that returned parts
must be in new, usable condition, be in current production and be readily
resalable.
There are no other significantly active competitors in the marine rig
construction and support industry due to the current low demand. However, if
demand for marine rigs increases, new competitors could be expected to enter
the market.
Historically, the make up of LeTourneau's customer base has been such
that none of the product lines have been dependent upon any one customer or
small group of customers.
Regulations and Hazards
LeTourneau's manufacturing operations and facilities are subject to
regulation by a variety of local, state and federal agencies which regulate
safety and the discharge of materials into the environment, including the
Environmental Protection Agency (EPA), the Texas Natural Resources Conservation
Commission (TNRCC) and the Mississippi Department of Environmental Quality.
LeTourneau's manufacturing facilities are also subject to the requirements of
the Occupational Safety Health Act and comparable state statutes.
Hazardous materials are generated at LeTourneau's Longview plant in
association with the steel making process. Industrial waste water generated at
the mini-steel mill facility for cooling operations is recirculated and quality
tests are conducted regularly. The facility has permits for waste water
discharges, solid waste disposal and air emissions. Waste products considered
hazardous by the EPA are disposed of by shipment to an EPA or state permitted
waste disposal facility.
As a part of the acquisition of the net assets of Marathon LeTourneau
Company, the sellers agreed to remediate certain environmental conditions at
the Longview, Texas and Vicksburg, Mississippi sites. This work will be
performed over the next 25 years. The remediation efforts include, among other
things, post-closure care for a landfill at the Longview facility closed by
Marathon LeTourneau Company prior to LeTourneau's acquisition.
LeTourneau jack-up designs are subject to regulatory approvals by
various agencies depending upon the customer's selection of geographic areas
where the rig will qualify for drilling. The rules vary by location and are
subject to frequent change. These rules primarily relate to safety and
environmental issues in addition to those which classify the jack-up as a
vessel.
LeTourneau may be liable for damages resulting from pollution of air,
land and inland waters associated with its manufacturing operations.
LeTourneau believes that compliance with environmental protection laws and
regulations will have no material effect on its capital expenditures, earnings
or competitive position during 1996. Although further legislation or
regulation pertaining to the protection of the environment may reasonably be
anticipated, the effects thereof on LeTourneau's manufacturing operations
cannot be accurately predicted.
As a manufacturing company, LeTourneau may be responsible for certain
risks associated with the use of its products. These risks include product
liability claims for personal injury and/or death, property damage, loss of use
of product, business interruption and necessary legal expenses to defend
LeTourneau against such claims. LeTourneau carries insurance which it believes
adequately covers such risks. LeTourneau did not assume certain liabilities of
Marathon LeTourneau Company, such as product liability and tort claims,
associated with all products manufactured, produced, marketed or distributed
prior to the date of the acquisition.
LeTourneau anticipates incurring expenses associated with the warranty
of its products, including those existing at the date of the acquisition. In
the non-marine business segments, dealers of LeTourneau's products perform the
warranty work for the
-9-
12
manufacturer, and in the marine segment, LeTourneau generally performs warranty
work directly.
AIRCRAFT OPERATIONS
The Company, through its wholly-owned subsidiary, Era Aviation, Inc.
("Era"), provides charter and contract helicopter and fixed-wing aircraft
services principally in Alaska, the coastal areas of Louisiana and Texas, and
the western United States. In Alaska, a diversified range of services has been
developed to include tourism, commercial fishing support and medical evacuation
as well as support for forest fire control, mining operations and seismic
testing. Additionally, the fixed-wing division of the Company conducts
scheduled airline service between six cities from a hub in Anchorage and to 18
villages from a hub in Bethel, Alaska. Services provided offshore Louisiana
and Texas are primarily to oil and gas related industries. In the western
United States, the majority of helicopter services are provided to governmental
agencies in support of forest fire control, construction, seismic testing and
onshore and offshore oil field support.
In 1991, the Company acquired a 49% interest in KLM Helikopters B.V., a
wholly-owned subsidiary of KLM Royal Dutch Airlines, as a means of gaining
access to the North Sea aviation market. The joint venture company, renamed
KLM ERA Helicopters B.V., currently owns 13 helicopters and leases two others.
Operating locations and the numbers of helicopters deployed at March 29, 1996
were as follows: ten in the Dutch Sector of the North Sea, which includes two
that are being leased from Era and five in the British Sector of the North Sea.
KLM ERA serves principally the offshore oil and gas drilling, production and
service companies operating in the Dutch and British Sectors of the North Sea.
Based on the number of helicopters operating, the Company is the
largest helicopter operator in Alaska. It provides charter services from bases
at Anchorage, Deadhorse (on the North Slope), Fairbanks, Juneau, Kenai and
Valdez. The Company's charter and contract services are provided throughout
Alaska with particular emphasis in the oil, mining and high density tourist
regions within the state.
Helicopters are usually operated on a seasonal basis in Alaska because
of the prevalent climatic conditions. The peak utilization period in Alaska is
May through September, with the winter months comprising the least active
period. The seasonal nature of the Alaska business has been ameliorated in
prior years by moving helicopters on a limited basis to the Gulf of Mexico area
and, more recently, by moving helicopters to the West and Northwest regions of
the United States and various overseas locations, the most recent being
Argentina and the Peoples Republic of China.
Since 1983, the Company has operated a scheduled commuter airline
service in Alaska encompassing the transportation of passengers, mail and
cargo. The Company currently serves Valdez, Kenai, Homer, Kodiak, Iliamna and
Cordova from its base hub in Anchorage. In addition, it services 18 remote
villages from its hub in Bethel, Alaska. The Company operates under a code
sharing agreement with Alaska Airlines which is the largest carrier of
passengers from the contiguous United States to Alaska. The Company's commuter
airline is the largest airline operation of that type within the state of
Alaska and is the third largest carrier of passengers into and out of the
Anchorage International Airport, including the large jet carriers.
In December 1995, the Company purchased certain assets of Alaska
Helicopters, Inc. consisting of 15 helicopters and one single engine fixed-wing
airplane, spare parts, equipment and a hangar and office building totaling
approximately 23,000 square feet. The building is located on leased property
contiguous to the Company's main facilities at the Anchorage International
Airport.
Since 1979, the Company has been providing charter and contract
helicopter services in the Gulf of Mexico area primarily to the offshore oil
and gas industry. Operations are conducted from the division office in Lake
Charles, Louisiana and from bases in the Louisiana cities of Morgan City,
Cameron, New Iberia, Intracoastal City, Venice, Fourchon Houma, Schriever and
Johnson Bayou and the Texas cities of Houston, Corpus Christi, Bay City and
Sabine Pass. Based upon the number of helicopters operating, the Company is
the third largest helicopter operator in the Gulf of Mexico.
-10-
13
In 1987, upon receiving FAA certification, the Company began
manufacturing and marketing, from its Gulf Coast Division facility at Lake
Charles, Louisiana, a composite external auxiliary fuel tank for use on Bell
205, 212 and 412 helicopters and the military "Huey" helicopter. The tank
system provides enhanced range with nominal drag while increasing the passenger
seats available. Sales to date have been to both civilian and military
customers, including a contract awarded by the US Army in 1995 to supply
emergency float systems for UH-1 Helicopters. Other aircraft accessories are
also manufactured at the facility.
Between 1990 and 1995 the Company provided airborne environmental
service consisting of airborne ground penetrating radar technology used
primarily for the detection of subsurface contaminants, including free
hydrocarbons and for finding subsurface coal veins, water tables and tunnels,
drums, tanks and other man-made objects and airborne cathodic monitoring
technology used to provide an early warning of potential corrosion failure of
underground pipelines. In June 1995, the Company sold the patents, rights and
equipment to the management team responsible for the operation.
As previously noted, the Company has operated helicopters in various
overseas locations. From 1992 to 1995, the Company had operations in Croatia
and Macedonia flying for the United Nations.
In 1995, aviation operations generated an operating loss (loss from
operations before deducting general and administrative expenses) of $ 4,319,000.
Contracts
The Company's flight services generally are engaged by customers by
entering into master service agreements, term contracts or day-to-day charter
arrangements. Master service agreements provide for incremental payments based
on usage, in some instances with fixed terms ranging from one month to one
year, and are cancelable upon notice by either party in 30 days or less. Some
contracts are not cancelable by either party and generally provide for
payments, depending upon the term, as follows: less than one month - either
incremental payments based on usage or incremental payments based on usage plus
a base daily rental; and one month to one year - incremental payments based on
usage plus a base monthly rental. Under day-to-day charters, the compensation
arrangement is the same as that of term contracts having a term of less than
one month. Payment, duration and cancellation features of the agreements,
contracts and charter arrangements used by KLM ERA are similar in nature and in
principle to those used in the Company's domestic operations. Because master
service agreements and day-to-day charters are the most common types of
engagements for its flight services, the Company believes that the contract
status of its aircraft as discussed in the following paragraph is more
informative than backlog information, which it believes is neither calculable
nor meaningful.
Company-owned aircraft available for contract use and day charters on
March 29, 1996 consisted of 86 helicopters (of which 47 were based in Alaska
and 39 in the Gulf of Mexico area) and 19 fixed-wing aircraft that were based
in Alaska. The aircraft acquired from Alaska Helicopters, Inc. in December
1995 are excluded from this count. The contract status as of March 29, 1996
consisted of: 77 master helicopter service agreements and 18 aircraft term
contracts (12 helicopters and six fixed-wing aircraft). The remaining aircraft
were being operated under day charters or were available for operation under
day charter or contract arrangements.
KLM ERA-owned aircraft available for contract use and day charters on
March 29, 1996 consisted of eight helicopters based in The Netherlands and five
in Great Britain. The contract status of such aircraft as of March 29, 1996
consisted of five master service agreements and eight term contracts.
Competition
Although the Company maintains the largest helicopter operation in
Alaska in terms of numbers of aircraft and revenues, it encounters intense
competition from several other companies which furnish similar services.
Approximately six other operators compete directly with the Company in Alaska
on a contract or charter basis. The Company competes over its scheduled
airline routes with up to four other carriers.
-11-
14
In the Gulf of Mexico area, the Company competes directly with five other
operators and ranks third in the number of helicopters operating with
approximately 6% of the market. A number of other helicopter operators compete
with the Company in the West and Northwest regions of the United States and in
overseas locations.
At present, KLM ERA has only one competitor in the Dutch sector of the
North Sea. KLM ERA's share of this helicopter market is estimated to be in
excess of 55%.
Regulations and Hazards
The operation of scheduled airline services in the United States
requires a certificate under the Federal Aviation Act of 1958, as presently
administered by the Department of Transportation. The granting of a
certificate is conditioned upon a showing of financial ability and operational
expertise. A similar certificate authorizing the right to operate a charter
service is not required by any jurisdiction in the Company's operating areas.
KLM ERA holds the necessary certificates for operating aircraft in The
Netherlands and, since June 1993, in the U.K sector of the North Sea. Other
operating certificates will be obtained on a case by case basis depending upon
the contracts to be awarded.
Operation of helicopters and fixed-wing aircraft, particularly under
weather conditions prevailing in Alaska, is considered potentially hazardous,
although the Company conducts rigorous safety training programs to minimize
these hazards. The Company believes that it is adequately protected by public
liability and property damage insurance, including hull insurance against loss
of equipment, but carries no insurance against loss of earnings.
The Company believes that KLM ERA is adequately protected by public
liability and property damage insurance, including hull insurance against loss
of equipment.
EMPLOYEES
The total numbers of employees of the Company at March 15, 1996 and at
December 31, 1995, 1994 and 1993 were as follows: 4,034, 3,930, 3,484 and
2,560, respectively. Some of the employees included in these numbers are not
United States citizens. None of the Company's employees are covered by
collective bargaining agreements with labor unions. The Company considers
relations with its employees to be satisfactory.
-12-
15
ITEM 2. PROPERTIES
The Company leases as its corporate headquarters 57,800 square feet of
space in an office tower located at 2800 Post Oak Boulevard in Houston, Texas.
DRILLING RIGS
The following is a summary of the principal drilling equipment owned or
operated by the Company and in service at March 29, 1996. See "Liquidity and
Capital Resources" as appearing in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on page 14 in the Annual Report
which page is incorporated herein by reference.
OFFSHORE
(b)
Depth: Year Contracting Party/
Water/ in (l) Type of Contract
Name/Class (a) Drilling Service Location (m) Estimated Release Date
- -------------- ------------- ------- ------------- --------------------------
Cantilever Jack-up Rigs:
Rowan Gorilla II 450'/30,000' 1984 Trinidad Amoco Trinidad Oil Co.
200-C (d) (e) (h) (l) Single Well (m) April 1996;
Amerada Hess Corporation
(l) Multiple Well (m) September 1996
Rowan Gorilla III 328'/30,000' 1984 Eastern Canada PanCanadian Oil Company
200-C (d) (e) (l) Term (m) December 1997
Rowan Gorilla IV 450'/30,000' 1986 Gulf of Mexico Texaco Exploration & Production, Inc.
200-C (d) (e) (h) (l) Single Well (m) April 1996;
Hunt Oil Company
(l) Single Well (m) September 1996
Rowan-California 225'/30,000' 1983 North Sea Arco British Limited
116-C (c) (e) (l) Single Well (m) April 1996;
Wintershall
(l) Multiple Well (m) December 1996
Rowan-Halifax 225'/30,000' 1982 North Sea Mobil North Sea Limited
116-C (c) (e) (i) (l) Multiple Well (m) September 1996;
Premier Oil & Gas Inc.
(l) Single Well (m) November 1996
Cecil Provine 225'/30,000' 1982 North Sea Amoco (U.K.) Exploration Company
116-C (c) (e) (j) (l) Multiple Well (m) April 1996;
Elf Aquitaine Inc.
(l) Multiple Well (m) October 1996
Arch Rowan 225'/30,000' 1981 North Sea Amoco (U.K.) Exploration Company
116-C (c) (e) (l) Multiple Well (m) July 1996;
Amoco Netherlands Petroleum
(l) Multiple Well (m) December 1996
Gilbert Rowe 350'/30,000' 1981 Gulf of Mexico The Louisiana Land and Exploration Co.
116-C (c) (e) (h) (l) Single Well (m) May 1996;
-13-
16
ITEM 2. PROPERTIES
OFFSHORE (Continued)
(b)
Depth: Year Contracting Party/
Water/ in (l) Type of Contract
Name/Class (a) Drilling Service Location (m) Estimated Release Date
- -------------- ------------- ------- ------------- --------------------------
(Cantilever Jack-up Rigs Continued)
Charles Rowan 350'/30,000' 1981 Gulf of Mexico Amoco Production Company
116-C (c) (e) (h) (l) Single Well (m) May 1996
Rowan-Paris 350'/30,000' 1980 Gulf of Mexico Enserch Exploration, Inc.
116-C (e) (h) (l) Single Well (m) April 1996;
Linder Oil & Gas
(l) Single Well (m) May 1996;
The Louisiana Land and Exploration Co.
(l) Single Well (m) August 1996
Rowan-Middletown 350'/30,000' 1980 Gulf of Mexico Kerr-McGee Corporation
116-C (e) (h) (l) Multiple Well (m) July 1996
Rowan-Fort Worth 350'/30,000' 1978 Gulf of Mexico Texaco Exploration & Production, Inc.
116-C (e) (h) (l) Multiple Well (m) August 1996
Conventional Jack-up Rigs:
Rowan-Juneau 300'/30,000' 1977 Gulf of Mexico Pennzoil Exploration & Production Co.
116 (c) (e) (f) (l) Single Well (Turnkey) (m) June 1996
Rowan-Odessa 350'/30,000' 1977 Gulf of Mexico Oryx Energy Company
116 (e) (f) (h) (l) Single Well(m) April 1996;
Samedan Oil Co.and Vastar Co.
(l) Multiple Well (m) July 1996
Rowan-Louisiana 350'/30,000' 1975 Gulf of Mexico Conoco, Inc.
84 (e) (f) (h) (l) Multiple Well (m) October 1996
Rowan-Alaska 350'/30,000' 1975 Gulf of Mexico CXY Energy, Inc.
84 (e) (f) (h) (l) Multiple Well (m) September 1996
Rowan-Texas 250'/20,000' 1973 Gulf of Mexico American Exploration Company
52 (l) Single Well (m) April 1996;
Hall-Houston Oil Company
(l) Single Well (m) May 1996
Rowan-Anchorage 250'/20,000' 1972 Gulf of Mexico Coastal Oil & Gas Corp.
52 (e) (l) Single Well (m) May 1996;
Apache Corporation
(l) Single Well (m) July 1996
Rowan-New Orleans 250'/20,000' 1971 Gulf of Mexico Forcenergy Gas Exploration, Inc.
52 (f) (g) (l) Multiple Well (m) May 1996
-14-
17
ITEM 2. PROPERTIES
OFFSHORE (Continued)
(b)
Depth: Year Contracting Party/
Water/ in (l) Type of Contract
Name/Class (a) Drilling Service Location (m) Estimated Release Date
- -------------- ------------- ------- ------------- --------------------------
(Conventional Jack-up Rigs Continued)
Rowan-Houston 250'/20,000' 1970 Gulf of Mexico Enserch Exploration, Inc.
52 (e) (l) Single Well (m) May 1996;
Coastal Oil Corp.
(l) Multiple Well (m) June 1996
Semi-Submersible Rig:
Rowan-Midland (e) 1,200'/25,000' 1976 Gulf of Mexico Murphy Exploration & Production Co.
(l) Single Well (m) May 1996;
Walter Oil & Gas Corporation
(l) Multiple Well(m) August 1996;
The Louisiana Land and Exploration Co.
(l) Single Well(m) September 1996
ONSHORE (k) Contracting Party/
Maximum (l) Type of Contract
Description Drilling Depth Location (m) Estimated Release Date
- ------------ ---------------- --------- -------------------------------
Three rigs 10,000' Argentina YPF, S.A.
(l) Term (m) March 1997
Two rigs 18,000'-30,000' Argentina Not Committed
One rig 18,000'-30,000' Louisiana Chesapeake Operating, Inc.
(l) Single Well (m) May 1996
One rig 18,000'-30,000' Louisiana UPRC
(l) Multiple Well (m) June 1996
One rig 18,000'-30,000' Texas Reata Oil & Gas
(l) Multiple Well (m) July 1996;
Four rigs 18,000'-30,000' Oklahoma & Texas Not Committed
Five rigs 20,000' Alaska Not Committed
_______________________________________________
(a) Classes 200-C ("Gorilla"), 116-C, 116, 84 and 52 are nomenclature
assigned by LeTourneau, Inc. to jack-ups of its design and construction.
(b) Indicates rated water depth in current location and rated drilling depth,
respectively.
(c) Unit modified to increase operating capability in hostile environments.
(d) Gorilla Class unit designed for extreme hostile environment capability.
(e) Unit equipped with a "top-drive" drilling system.
(f) Unit equipped with a "skid base" unit.
-15-
18
(Footnotes continued)
(g) Unit equipped with drilling/heavy-lift crane option.
(h) Unit equipped with leg extensions.
(i) Rig sold in December 1984 and leased back for 15 years.
(j) Rig sold in December 1985 and leased back for 15 years.
(k) Onshore rigs, including the three used rigs purchased in 1991, were
constructed at various dates between 1960 and 1982, utilizing, in some
instances, new as well as used equipment. Most of the older rigs have
been substantially rebuilt subsequent to their respective dates of
construction.
(l) Refer to "Contracts" on page 4 of this Form 10-K for definition of types
of contracts.
(m) Indicates estimated completion date of work to be performed.
The Company's drilling division leases and, in some cases, owns various
operating and administrative facilities generally consisting of office,
maintenance and storage space in the states of Alaska, Texas and Louisiana and,
on a foreign basis, in the countries of Canada, Argentina, England, Scotland,
The Netherlands and Trinidad.
-16-
19
MANUFACTURING FACILITIES
LeTourneau's principal manufacturing facility and headquarters are
located in Longview, Texas on approximately 2,400 acres with about 1.2 million
square feet under roof. Included within the facility are: a mini-steel mill
having approximately 330,000 square feet of covered work space and housing two
25-ton electric arc furnaces having an aggregate 120,000 tons per year
capacity; a fabrication shop having approximately 300,000 square feet of
covered work space and housing a 3,000 ton vertical bender for making roll-ups
or flattening materials up to 2 1/2 inches thick by 11 feet wide; a machine
shop having approximately 140,000 square feet of covered work space and housing
various types of machinery; and an assembly shop having approximately 124,000
square feet and housing various types of machinery.
The marine group's facility located in Vicksburg, Mississippi is
located on 1,850 acres of land and has approximately 476,000 square feet of
covered work space. In conjunction with the announcement of the construction
of Rowan Gorilla V, this facility has now been reopened and is essentially
being rebuilt.
The LeTourneau Portland Division's distributor for forest products in
the Northwestern United States is located on a six acre site in Troutdale,
Oregon with approximately 22,000 square feet of building space.
The Western Mining Division of LeTourneau headquartered in Tucson,
Arizona is housed in a 20,000 square foot leased facility. It functions as the
distributor for LeTourneau's mining equipment products in the Western United
States.
AIRCRAFT
At March 29, 1996, the U.S.-based Company-owned helicopter fleet
consisted of 14 twin-engine turbine IFR rated Bell 212 helicopters (14
passenger), 16 twin-engine turbine IFR rated Bell 412 helicopters (14
passenger), 29 twin-engine turbine MBB BO-105CBS helicopters (five passenger),
two Aerospatiale 332L Super Puma helicopters (19 passenger) and 25 various
single-engine turbine helicopters (four to six passenger). The U.S.-based
fixed-wing fleet of Company-owned aircraft consisted of four Convair 580s (50
passenger), nine DeHavilland Twin Otters (9-19 passenger), two DeHavilland Dash
8s (37 passenger), two Douglas DC-3s (28 passenger), one Lear Jet 35A (six
passenger) and one Beechcraft King Air 200C (six passenger).
Helicopters owned by KLM ERA on March 29, 1996 consisted of five
twin-engine turbine IFR rated Sikorsky S-61N helicopters (26 passenger) and
eight twin-engine turbine IFR rated Sikorsky S-76B helicopters (13 passenger).
The Company's principal aircraft bases in Alaska, all located on
leased property, are a fixed-wing air service center (57,000 square feet of
hangar, repair and office facilities) at Anchorage International Airport, with
two adjacent hangars housing the Company's helicopter and fixed-wing operations
totaling aproximately 45,000 square feet, and hangar, office and repair
facilities at Fairbanks International Airport (13,000 square feet). The
Company also maintains similar, smaller helicopter facilities in Alaska at
Deadhorse, Juneau, Valdez and Yakutat.
The Company's principal facilities to accommodate its Gulf of Mexico
operations are located on leased property at Lake Charles Regional Airport.
The facilities, comprising 53,000 square feet, include helicopter hangars, a
repair facility and an operations and administrative building. The Company
also operates a helicopter facility (20,700 square feet of hangar, repair and
office facilities) located on leased property at the Terrebonne Airport in
Houma, Louisiana and a helicopter facility (5,700 square feet of hangar, repair
and office facilities) located on leased property in New Iberia, Louisiana.
KLM ERA's principal facility to accommodate its operations in the
Dutch sector of the North Sea is a base located in Den Helder. The facility,
comprising 35,000 square feet, includes a helicopter hangar, a repair facility
and an operations and administrative building. A facility located in Amsterdam
was closed and consolidated with the Den Helder operations in March 1995. To
accommodate its operations in the British Sector of the North Sea, KLM ERA also
has a helicopter hangar (13,000 square feet) and office facility (2,800 square
feet) located at Norwich Airport.
-17-
20
ITEM 3. LEGAL PROCEEDINGS
The Company is involved from time to time in litigation arising out of
the conduct of the Company's operations and other matters, not all the
potential liabilities with respect to which are covered by the terms of the
Company's insurance policies. While the Company is unable to predict the
ultimate liabilities which may result from such litigation, the Company
believes that no such litigation in which the Company was involved as of March
29, 1996 will have a material adverse effect on the financial position or
results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Company's common
stockholders during the fourth quarter of the fiscal year ended December 31,
1995.
ADDITIONAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT
The names, positions, years of credited service and ages of the officers
of the Company and certain officers of the Company's wholly-owned
subsidiaries, Era Aviation, Inc. and LeTourneau Inc., as of March 29, 1996 are
listed below. Officers of all three entities are normally appointed annually
by each entity's Board of Directors at the bylaws-prescribed meetings held in
the spring and serve at the discretion of the Board of Directors. There are no
family relationships among these officers, nor any arrangements or
understandings between any officer and any other person pursuant to which the
officer was selected.
Years of
Credited
Name Position Service Age
-------------------- -------------------------------- ---------- -----
Executive Officers of the Registrant:
C. R. Palmer Chairman of the Board, President 35 61
and Chief Executive Officer
R. G. Croyle Executive Vice President 22 53
D. F. McNease Senior Vice President, Drilling 22 44
E. E. Thiele Senior Vice President, Finance, 26 56
Administration and Treasurer
J. Earl Beckman(1) Vice President, Manufacturing 2 58
John L. Buvens Vice President, Legal 15 40
C. W. Johnson(2) Vice President, Aviation 18 52
Mark A. Keller Vice President, Marketing - 4 43
North American Drilling
Paul L. Kelly Vice President, Special Projects 13 56
Bill S. Person Vice President, Industrial Relations 28 47
William C. Provine Vice President, Investor Relations 9 49
Other Officers of the Registrant:
William H. Wells Controller 2 33
Mark H. Hay Secretary and Assistant Treasurer 17 51
P. G. Wheeler Assistant Treasurer 21 48
Lynda A. Aycock Assistant Treasurer and 24 49
Assistant Secretary
Certain Officer of Era Aviation, Inc.:
James Vande Voorde Vice President 22 56
(1) Also serves as President and Chief Executive Officer of LeTourneau, Inc.
(2) Also serves as President and Chief Operating Officer of Era Aviation, Inc.
Each of the executive officers and other officers of the Company as well
as the officers of Era Aviation, Inc. and LeTourneau, Inc. listed above
continuously served in
-18-
21
the position shown above for more than the past five years except as noted in
the following paragraphs.
Since October 1993, Mr. Croyle's principal occupation has been in the
position set forth. For more than five years prior to that time, Mr. Croyle
served as Vice President, Legal of the Company.
Since October 1993, Mr. McNease's principal occupation has been in the
position set forth. From April 1991 to October 1993, Mr. McNease served as
Vice President, Drilling of the Company. For more than five years prior to
that time, he served as Vice President of Rowandrill, Inc., a subsidiary of the
Company.
Since April 1994, Mr. Thiele's principal occupation has been in the
position set forth. From January 1994 to April 1994, Mr. Thiele served in the
position of Vice President, Finance, Administration and Treasurer. From
February 1989 to January 1994, he served as Vice President, Finance and
Administration.
Since April 1994, Mr. Beckman's principal occupation has been in the
position set forth. From February 1994 to present, Mr. Beckman has also served
in the position of President and Chief Executive Officer of LeTourneau, Inc, a
subsidiary of the Company. For more than five years prior to that time, he
served as President of Marathon LeTourneau Company, a company whose net assets
were purchased by LeTourneau, Inc. in February 1994. Marathon LeTourneau was
not, and is not now, a parent, subsidiary or affiliate of the Company.
Since October 1993, Mr. Buvens' principal occupation has been in the
position set forth. From April 1988 to present and April 1994 to present, Mr.
Buvens has also served in the positions of Vice President of Rowandrill, Inc.
and Rowan International, Inc., respectively, both subsidiaries of the Company.
Since April 1994, Mr. Johnson's principal occupation has been in the
position set forth. From December 1993 to present, Mr. Johnson has also served
in the position of President and Chief Operating Officer of Era Aviation, Inc.,
a subsidiary of the Company. For more that five years prior to that time, he
served as Executive Vice President of Era.
Since April 1994, Mr. Keller's principal occupation has been in the
position set forth.From July 1992 to present and April 1993 to present, Mr.
Keller has also served in the positions of Vice President of Terminator, Inc.
and Rowandrill, Inc., respectively, both subsidiaries of the Company. From
April 1992 to July 1992, Mr. Keller served as Marketing Coordinator for
Terminator, Inc. For more than five years prior to April 1992, he served as
Senior Vice President of Chiles Offshore Corp. Chiles is not a parent,
subsidiary or affiliate of the Company.
Since October 1993, Mr. Person's principal occupation has been in the
position set forth. From April 1990 to October 1993, Mr. Person served as
Director of British American Offshore Limited, a subsidiary of the Company.
For more than five years prior to that time, he served as Manager of Industrial
Relations of the Company.
Since October 1993, Mr. Provine's principal occupation has been in the
position set forth. For more than five years prior to that time, Mr. Provine
served as Vice President of Rowandrill, Inc., a subsidiary of the Company.
Since joining the Company in March 1994, Mr. Wells' occupation has
been in the position set forth. For more than five years prior to that time,
Mr. Wells served in various positions with the independent accounting firm of
Deloitte & Touche LLP, including Audit Manager and, most recently, Senior Audit
Manager. Deloitte & Touche is not a parent, subsidiary or affiliate of the
Company but does serve as the Company's independent auditors.
Since April 1994, Ms. Aycock's principal occupation has been in the
position set forth. From October 1993 to April 1994, Ms. Aycock served in the
position of Assistant Treasurer. For more than five years prior to that time,
Ms. Aycock served as an Accountant for the Company.
In addition to serving in the position shown above, Mr. Wheeler has
also served as Corporate Tax Director of the Company for more than five years.
-19-
22
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The information required hereunder regarding the Common Stock price range
and cash dividend information for 1995 and 1994 and the number of holders of
Common Stock is set forth on page 27 of the Company's Annual Report under the
title "Common Stock Price Range, Cash Dividends and Stock Splits", and is
incorporated herein by reference, except for the final two paragraphs under such
title. Also incorporated herein by reference to the Annual Report is the
twelfth paragraph appearing on page 14 within "Management's Discussion and
Analysis of Financial Condition and Results of Operations", which paragraph
provides information pertinent to the Company's ability to pay cash dividends
subject to certain restrictions. The Company's Common Stock is listed on the
New York Stock Exchange and the Pacific Stock Exchange.
ITEM 6. SELECTED FINANCIAL DATA
The information required hereunder is set forth on pages 10 and 11 of the
Company's Annual Report under the title "Financial Review" and is incorporated
herein by reference, except for the information for the years 1990, 1989, 1988,
1987 and 1986.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required hereunder is set forth on pages 12, 13 and 14
under the title "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Company's Annual Report and is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Refer to ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K on page 21 of this Form 10-K for a listing of financial statements of
the registrant and its subsidiaries, all of which financial statements are
incorporated by reference under this item.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information provided under the columns entitled Name, Principal
Occupation for the Past Five Years, Age and Year First Became Director in the
table on pages 5 and 6, in footnotes (1) and (3) on page 6 and in the paragraph
following footnote (3) on page 3 of the Proxy Statement for the Company's 1996
Annual Meeting of Stockholders (the "Proxy Statement") is incorporated herein
by reference. There are no family relationships among the directors or
nominees for directors and the executive officers of the Company, nor any
arrangements or understandings between any director or nominee for director and
any other person pursuant to which such director or nominee for director was
selected. Except as otherwise indicated, each director or nominee for director
of the Company has been employed or engaged for the past five years in the
principal occupation set forth opposite his name in the information
incorporated by reference. See ADDITIONAL ITEM. EXECUTIVE OFFICERS OF THE
REGISTRANT on pages 18-19 of this Form 10-K for information relating to
executive officers.
ITEM 11. EXECUTIVE COMPENSATION
The standard arrangement for compensating directors described under the
title, "Director Compensation" at the bottom of page 11 of the Proxy Statement
and the information appearing under the titles "Summary Compensation Table",
"Option Grants in Last Fiscal Year", "Aggregated Option Exercises in Last
Fiscal Year and Fiscal Year-End Option Values", "Option Plans", "Convertible
Debenture Incentive Plan" and "Pension Plan" on pages 7 through 11 of the Proxy
Statement are incorporated herein by reference. In accordance with the
instructions to Item 402 of Regulation S-K, the information contained in the
Proxy Statement under the titles "Board Compensation Committee Report on
Executive
-20-
23
Compensation" and "Stockholder Return Performance Presentation" shall not be
deemed to be filed as part of this Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information regarding security ownership of certain beneficial owners
and management of the Company set forth under the headings "Voting Securities
Outstanding" appearing on page 1 and "Security Ownership of Management and
Principal Stockholders" appearing on pages 2 and 3 of the Proxy Statement is
incorporated herein by reference.
The business address of all directors is the principal executive offices
of the Company as set forth on the facing page of this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain business relationships and transactions
between the Company and certain of the directors of the Company under the
heading "Compensation Committee Interlocks and Insider Participation; Certain
Transactions" appearing on page 19 of the Proxy Statement is incorporated
herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)1. Financial Statements
The following financial statements and independent auditors'
report, included in the Annual Report, are incorporated herein by
reference:
Page of 1995
Annual Report
-------------
Independent Auditors' Report............................. 15
Consolidated Balance Sheet
December 31, 1995 and 1994.............................. 16
Consolidated Statement of Operations for the
Years Ended December 31, 1995, 1994 and 1993 ........... 17
Consolidated Statement of Changes in Stockholders'
Equity for the Years Ended December 31, 1995, 1994 and
1993.................................................... 18
Consolidated Statement of Cash Flows for
the Years Ended December 31, 1995, 1994 and 1993........ 19
Notes to Consolidated Financial Statements............... 20
Selected Quarterly Financial Data (Unaudited) for
the Quarters Ended March 31, June 30, September 30
and December 31, 1995 and 1994.......................... 27
2. Financial Statement Schedules
Financial Statement Schedules I, II, III, IV, and V are not included
in this Form 10-K because such schedules are not required, not significant or
because the required information is shown in Notes to the Consolidated
Financial Statements of the Company's Annual Report.
3. Exhibits:
Unless otherwise indicated below as being incorporated by reference to
another filing of the Company with the Securities and Exchange
Commission, each of the following exhibits is filed herewith:
3a Restated Certificate of Incorporation of the Company, dated February 17, 1984, incorporated by reference to:
Exhibit 3a to the Company's Form 10-K for the fiscal year ended December 31, 1983 (File No. 1-5491); Exhibit 4.2 to
the Company's Registration Statement on Form S-3 (Registration No. 33-13544); and Exhibits 4a, 4b, 4c, 4d and 4e
below.
-21-
24
3b Bylaws of the Company amended as of April 23, 1993, incorporated by reference to Exhibit 3 to the Company's Form
10-Q for the quarter ended March 31, 1993 (File No. 1-5491).
4a Certificate of Designation of the Company's $2.125 Convertible Exchangeable Preferred Stock incorporated by
reference to Exhibit 4.2 to the Company's Registration Statement on Form S-3 (Registration No. 33-6476).
4b Certificate of Designation of the Company's Series I Preferred Stock incorporated by reference to Exhibit 4b to the
Company's Form 10-K for the fiscal year ended December 31, 1986 (File No.1-5491).
4c Certificate of Designation of the Company's Series II Preferred Stock incorporated by reference to Exhibit 4c to the
Company's Form 10-K for the fiscal year ended December 31, 1987 (File No.1-5491).
4d Certificate of Designation of the Company's Series III Preferred Stock incorporated by reference to Exhibit 4d to
the Company's Form 10-K for the fiscal year ended December 31, 1994 (File No. 1-5491).
4e Certificate of Designation of the Company's Series A Junior Preferred Stock dated March 2, 1992 incorporated by
reference to Exhibit 4d to the Company's Form 10-K for the fiscal year ended December 31, 1991 (File No. 1-5491).
4f Rights Agreement as amended dated as of February 25, 1992 between the Company and Citibank, N.A. as Rights Agent
incorporated by reference to Exhibit 4g to the Company's Form 10-K for the fiscal year ended December 31, 1994
(File No. 1-5491).
4g Indenture dated December 1, 1991 between the Company and Bankers Trust Company, as Trustee, relating to the Company's
11-7/8% Senior Notes due 2001 incorporated by reference to Exhibit 28.1 to the Company's Current Report on Form 8-K
dated December 12, 1991 (File No. 1-5491).
4h Specimen Common Stock certificate, incorporated by reference to Exhibit 4g to the Company's Form 10-K for the fiscal
year ended December 31, 1992 (File No. 1-5491).
4i Form of Promissory Note dated November 30, 1994 between the purchasers of Series III Floating Rate Subordinated
Convertible Debentures due 2004 and the Company incorporated by reference to Exhibit 4j to the Company's Form 10-K
for the fiscal year ended December 31, 1994 (File No. 1-5491).
10a 1980 Nonqualified Stock Option Plan of the Company together with form of Stock Option Agreement related thereto
incorporated by reference to Exhibit 5.10 to the Company's Registration Statement on Form S-7 (Registration
No. 2-68622).
10b 1988 Nonqualified Stock Option Plan of the Company as amended together with form of Stock Option Agreement related
thereto incorporated by reference to Exhibit 10b of the Company's Form 10-K for the fiscal year ended December 31,
1992 (File No. 1-5491).
10c Amendment No. 1 dated October 25, 1990, to all then outstanding Stock Option Agreements related to the 1980
Nonqualified Stock Option Plan of the Company incorporated by reference to Exhibit 10c to the Company's Form 10-K
for the fiscal year ended December 31, 1990 (File No. 1-5491).
10d Amendment No. 2 dated May 23, 1991, to all then outstanding Stock Option Agreements related to the 1980 Nonqualified
Stock Option Plan of the Company incorporated by reference to Exhibit 10d to the Company's Form 10-K for the fiscal
year ended December 31, 1991 (File No. 1-5491).
10e Amendment No. 1 dated October 25, 1990, to all then outstanding Stock Option Agreements related to the 1988
Nonqualified Stock Option Plan of the Company incorporated by reference to Exhibit 10d to the Company's Form 10-K
for the fiscal year ended December 31, 1990 (File No. 1-5491).
10f Amendment No. 2 dated May 23, 1991, to all then outstanding Stock Option Agreements related to the 1988 Nonqualified
Stock Option Plan of the Company
-22-
25
incorporated by reference to Exhibit 10f to the Company's Form 10-K for the fiscal
year ended December 31, 1991 (File No. 1-5491).
10g 1986 Convertible Debenture Incentive Plan of the Company as amended incorporated by reference to Exhibit 10h to the
Company's Form 10-K for the fiscal year ended December 31, 1994 (File No. 1-5491).
10h Pension Restoration Plan of the Company incorporated by reference to Exhibit 10h to the Company's Form 10-K for the
fiscal year ended December 31, 1992 (File No. 1-5491).
10i Pension Restoration Plan of LeTourneau, Inc. incorporated by reference to Exhibit 10j to the Company's Form 10-K for
the fiscal year ended December 31, 1994 (File No. 1-5491).
10j Credit Agreement dated September 22, 1986 (including amendatory letter dated March 25, 1987) and First Preferred Ship
Mortgage dated November 7, 1986 between the Company and Marathon LeTourneau Company incorporated by reference to
Exhibit 10c to the Company's Form 10-K for the fiscal year ended December 31, 1986 and amendatory letter dated
February 21, 1992 incorporated by reference to Exhibit 10h to the Company's Form 10-K for the fiscal year ended
December 31, 1991 (File No. 1-5491).
10k Participation Agreement dated December 1, 1984 between the Company and Textron Financial Corporation et al. and
Bareboat Charter dated December 1, 1984 between the Company and Textron Financial Corporation et al. incorporated by
reference to Exhibit 10c to the Company's Form 10-K for the fiscal year ended December 31, 1985 (File No. 1-5491).
10l Participation Agreement dated December 1, 1985 between the Company and Eaton Leasing Corporation et. al. and
Bareboat Charter dated December 1, 1985 between the Company and Eaton Leasing Corporation et. al. incorporated by
reference to Exhibit 10d to the Company's Form 10-K for the fiscal year ended December 31, 1985 (File No.1-5491).
10m Corporate Continuing Guaranty dated December 31, 1986 between Shearson Lehman Brothers Holdings Inc. and the Company
incorporated by reference to Exhibit 10h to the Company's Form 10-K for the fiscal year ended December 31, 1986 (File
No.1-5491).
10n Corporate Continuing Guaranty dated September 10, 1987 between Shearson Lehman Brothers Holdings Inc. and the Company
incorporated by reference to Exhibit 10i to the Company's Form 10-K for the fiscal year ended December 31, 1987 (File
No.1-5491).
10o Cross-Border Corporate Continuing Guaranty dated May 29, 1991 between Citicorp and the Company's wholly-owned
subsidiary, Rowan International, Inc. incorporated by reference to Exhibit 10o to the Company's Form 10-K for the
fiscal year ended December 31, 1991 (File No. 1-5491).
10p Amendment No. 2 dated April 1, 1995 to the Consulting Agreement dated March 1, 1991 between the Company and C. W.
Yeargain.
10q Consulting Agreement as amended dated March 1, 1991 between the Company and C. W. Yeargain.
10r Acquisition Agreement dated as of November 7, 1991, among KLM Royal Dutch Airlines, Blue Yonder I B.V., KLM
Helikopters B.V. and Rowan Aviation (Netherlands) B.V. incorporated by reference to Exhibit 28.1 to the Company's
Current Report on Form 8-K dated November 7, 1991 (File No. 1-5491).
10s Business Loan Agreement dated January 27, 1993 between Key Bank of Alaska and the Company's wholly-owned subsidiary,
Era Aviation, Inc. incorporated by reference to Exhibit 10s to the Company's Form 10-K for the fiscal year ended
December 31, 1992 (File No. 1-5491).
10t Asset Purchase Agreement dated as of November 12, 1993, among Rowan Companies, Inc., Rowan Equipment, Inc., General
Cable Corporation, Marathon LeTourneau Company, Marathon LeTourneau Sales & Service Company and Marathon LeTourneau
-23-
26
Australia Pty. Ltd. incorporated by reference to the Company's Current Report on Form 8-K dated February 11, 1994
(File No. 1-5491).
10u Asset Purchase and Sale Agreement dated December 5, 1995 between Era Aviation, Inc. and Columbia Helicopters, Inc.,
Alaska Helicopters, Inc. and BIJOS Enterprises.
11 Computation of Primary and Fully Diluted Earnings (Loss) Per Share for the years ended December 31, 1995, 1994 and
1993 appearing on page 27 in this Form 10-K.
*13 Annual Report to Stockholders for fiscal year ended December 31, 1995.
21 Subsidiaries of the Registrant as of March 29, 1996.
23 Independent Auditors' Consent.
24 Powers of Attorney pursuant to which names were affixed to this Form 10-K for the fiscal year ended December 31, 1995.
27 Financial Data Schedule for the year ended December 31, 1995.
The Company agrees to furnish to the Commission upon request a copy of
all instruments defining the rights of holders of long-term debt of the Company
and its subsidiaries.
________________________________
* Only portions specifically incorporated herein are deemed to
be filed.
EXECUTIVE COMPENSATION PLANS
AND ARRANGEMENTS
Compensatory plans in which directors and executive officers of the
Company participate are listed as follows:
o 1980 Nonqualified Stock Option Plan of the Company together with form
of Stock Option Agreement related thereto incorporated by reference to
Exhibit 5.10 to the Company's Registration Statement on Form S-7
(Registration No. 2-68622); Amendment No. 1 dated October 25, 1990, to
all then outstanding Stock Option Agreements related to such Plan
incorporated by reference to Exhibit 10c to the Company's Form
10-K for the fiscal year ended December 31, 1990 (File No. 1-5491); and
Amendment No. 2 dated May 23, 1991, to all then outstanding Stock
Option Agreements related to such Plan incorporated by reference to
Exhibit 10d to the Company's Form 10-K for the fiscal year ended
December 31, 1991 (File No. 1-5491).
o 1988 Nonqualified Stock Option Plan of the Company as amended
together with form of Stock Option Agreement related thereto
incorporated by reference to Exhibit 10b to the Company's Form 10-K for
the fiscal year ended December 31, 1992 (File No. 1-5491; Amendment
No. 1 dated October 25, 1990, to all then outstanding Stock Option
Agreements related to such Plan incorporated by reference to Exhibit
10d to the Company's Form 10-K for the fiscal year ended December 31,
1990 (File No. 1-5491); and Amendment No. 2 dated May 23, 1991, to all
then outstanding Stock Option Agreements related to such Plan
incorporated by reference to Exhibit 10f to the Company's Form 10-K for
the fiscal year ended December 31, 1991 (File No. 1-5491).
o 1986 Convertible Debenture Incentive Plan of the Company as amended
included as Exhibit 10h to the Company's Form 10-K for the fiscal
year ended December 31, 1994 (File No. 1-5491).
o Pension Restoration Plan of the Company incorporated by reference to
Exhibit 10h to the Company's Form 10-K for the fiscal year ended
December 31, 1992 (File 1-5491).
o Pension Restoration Plan of LeTourneau, Inc. incorporated by reference
to Exhibit 10j to the Company's Form 10-K for the fiscal year ended
December 31, 1994 (File No. 1-5491).
-24-
27
(b) Reports on Form 8-K:
o No reports on Form 8-K were filed by the Registrant during the fourth
quarter of fiscal year 1995.
For the purposes of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933,
the undersigned registrant hereby undertakes as follows, which undertaking
shall be incorporated by reference into registrant Registration Statements on
Form S-8 Nos. 2-67866 (filed May 22, 1980), 2-58700, as amended by
Post-Effective Amendment No. 4 (filed June 11, 1980), 33-33755, as amended by
Amendment No. 1 (filed March 29, 1990),33-61444 (filed April 23, 1993),
33-51103 (filed November 18, 1993) 33- 51105 (filed November 18, 1993) and
33-51109 (filed November 18, 1993):
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the act and will be governed by the final
adjudication of such issue.
-25-
28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
ROWAN COMPANIES, INC.
By: C. R. PALMER
(C. R. Palmer, Chairman of
the Board, President and
Chief Executive Officer)
Date: March 29, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
C. R. PALMER Chairman of the Board, President March 29, 1996
(C. R. Palmer) and Chief Executive Officer
E. E. THIELE Principal Financial Officer March 29, 1996
(E. E. Thiele)
WILLIAM H. WELLS Principal Accounting Officer March 29, 1996
(William H. Wells)
*RALPH E. BAILEY Director March 29, 1996
(Ralph E. Bailey)
*HENRY O. BOSWELL Director March 29, 1996
(Henry O. Boswell)
*H. E. LENTZ Director March 29, 1996
(H. E. Lentz)
*WILFRED P. SCHMOE Director March 29, 1996
(Wilfred P. Schmoe)
*CHARLES P. SIESS, JR. Director March 29, 1996
(Charles P. Siess, Jr.)
*PETER SIMONIS Director March 29, 1996
(Peter Simonis)
*C. W. YEARGAIN Director March 29, 1996
(C. W. Yeargain)
* BY C. R. PALMER
(C. R. Palmer, Attorney-in-fact)
-26-
29
EXHIBIT 11
ROWAN COMPANIES, INC. AND SUBSIDIARIES
COMPUTATION OF PRIMARY AND FULLY
DILUTED EARNINGS (LOSS) PER SHARE
(in thousands except per share amounts)
For the Year Ended December 31,
-----------------------------------------
1995 1994 1993
-------- ------- -------
Weighted average shares of common stock outstanding 84,589 84,092 78,924
Stock options (treasury stock method) 1,593 (A) 1,436 (A) 1,377 (A)
----------------------------------------------
Weighted average shares for primary earnings (loss) per share
calculation 86,182 85,528 80,301
Stock options (treasury stock method) 78 (A)
Shares issuable from assumed conversion of floating rate
subordinated convertible debentures 2,003 (A) 612 (A) 516 (A)
----------------------------------------------
Weighted average shares for fully diluted earnings
(loss) per share calculation 88,263 86,140 80,817
===============================================
Net income (loss) for primary calculation $(18,436) $(22,989) $(13,259)
Subordinated debenture interest 374 301 282
-----------------------------------------------
Net income (loss) for fully diluted
calculation $(18,062) $(22,688) $(12,977)
================================================
Primary earnings (loss) per share $ (0.21) (B) $ (0.27) $ (0.17)
================================================
Fully diluted earnings (loss) per share $ (0.20) (B) $ (0.26) (B) $ (0.16)( B)
=================================================
Note: Reference is made to Note 1 to Consolidated Financial Statements
regarding computation of per share amounts.
(A) Included in accordance with Regulation S-K Item 601(b)(11) although not
required to be provided for by Accounting Principles Board Opinion No. 15
because the effect is insignificant.
(B) This calculation is submitted in accordance with regulation S-K Item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an antidilutive result.
27
30
EXHIBIT INDEX
Page 1 of 4
FOOTNOTE EXHIBIT
REFERENCE NUMBER EXHIBIT DESCRIPTION
- ---------- --------- -----------------------------------------------------
(1) 3a Restated Certificate of Incorporation of the
Company, dated February 17, 1984, incorporated by
reference to: Exhibit 3a to the Company's Form 10-K
for the fiscal year ended December 31, 1983 (File
No. 1-5491); Exhibit 4.2 to the Company's
Registration Statement on Form S-3 (Registration No.
33-13544); and Exhibits 4a, 4b, 4c, 4d and 4e below.
(1) 3b Bylaws of the Company amended as of April 23, 1993,
incorporated by reference to Exhibit 3 to the
Company's Form 10-Q for the quarter ended March 31,
1993 (File No. 1-5491).
(1) 4a Certificate of Designation of the Company's $2.125
Convertible Exchangeable Preferred Stock
incorporated by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-3
(Registration No. 33-6476).
(1) 4b Certificate of Designation of the Company's Series I
Preferred Stock incorporated by reference to Exhibit
4b to the Company's Form 10-K for the fiscal year
ended December 31, 1986 (File No.1-5491).
(1) 4c Certificate of Designation of the Company's Series
II Preferred Stock incorporated by reference to
Exhibit 4c to the Company's Form 10-K for the fiscal
year ended December 31, 1987 (File No.1-5491).
(1) 4d Certificate of Designation of the Companies Series
III Preferred Stock incorporated by reference to
Exhibit 4d to the Company's Form 10-K for the fiscal
year ended December 31, 1994 (File No. 1-5491).
(1) 4e Certificate of Designation of the Company's Series A
Junior Preferred Stock dated March 2, 1992
incorporated by reference to Exhibit 4d to the
Company's Form 10-K for the fiscal year ended
December 31, 1991 (File No. 1-5491).
(1) 4f Rights Agreement as amended dated as of February 25,
1992 between the Company and Citibank, N.A. as
Rights Agent incorporated by reference to Exhibit 4g
to the Company's Form 10-K for the fiscal year ended
December 31, 1994 (File No. 1-5491).
(1) 4g Indenture dated December 1, 1991 between the Company
and Bankers Trust Company, as Trustee, relating to
the Company's 11-7/8% Senior Notes due 2001
incorporated by reference to Exhibit 28.1 to the
Company's Current Report on Form 8-K dated December
12, 1991 (File No. 1-5491).
(1) 4h Specimen Common Stock certificate, incorporated by
reference to Exhibit 4g to the Company's Form 10-K
for the fiscal year ended December 31, 1992 (File
No. 1-5491).
31
EXHIBIT INDEX
Page 2 of 4
FOOTNOTE EXHIBIT
REFERENCE NUMBER EXHIBIT DESCRIPTION
- ---------- ------- ------------------------------------------------------
(1) 4i Form of Promissory Note dated November 30, 1994
between the purchasers of Series III Floating Rate
Subordinated Convertible Debentures due 2004 and the
Company incorporated by reference to Exhibit 4j to
the Company's Form 10-K for the fiscal year ended
December 31, 1994 (File No. 1-5491).
(1) 10a 1980 Nonqualified Stock Option Plan of the Company
together with form of Stock Option Agreement related
thereto incorporated by reference to Exhibit 5.10 to
the Company's Registration Statement on Form S-7
(Registration No. 2-68622).
(1) 10b 1988 Nonqualified Stock Option Plan of the Company
as amended together with form of Stock Option
Agreement related thereto incorporated by reference
to Exhibit 10b of the Company's Form 10-K for the
fiscal year ended December 31, 1992 (File No. 1-
5491).
(1) 10c Amendment No. 1 dated October 25, 1990, to all then
outstanding Stock Option Agreements related to the
1980 Nonqualified Stock Option Plan of the Company
incorporated by reference to Exhibit 10c to the
Company's Form 10-K for the fiscal year ended
December 31, 1990 (File No. 1-5491).
(1) 10d Amendment No. 2 dated May 23, 1991, to all then
outstanding Stock Option Agreements related to the
1980 Nonqualified Stock Option Plan of the Company
incorporated by reference to Exhibit 10d to the
Company's Form 10-K for the fiscal year ended
December 31, 1991 (File No. 1-5491).
(1) 10e Amendment No. 1 dated October 25, 1990, to all then
outstanding Stock Option Agreements related to the
1988 Nonqualified Stock Option Plan of the Company
incorporated by reference to Exhibit 10d to the
Company's Form 10-K for the fiscal year ended
December 31, 1990 (File No. 1-5491).
(1) 10f Amendment No. 2 dated May 23, 1991, to all then
outstanding Stock Option Agreements related to the
1988 Nonqualified Stock Option Plan of the Company
incorporated by reference to Exhibit 10f to the
Company's Form 10-K for the fiscal year ended
December 31, 1991 (File No. 1-5491).
(1) 10g 1986 Convertible Debenture Incentive Plan of the
Company as amended incorporated by reference to
Exhibit 10h to the Company's Form 10-K for the
fiscal year ended December 31, 1994 (File No. 1-
5491).
(1) 10h Pension Restoration Plan of the Company incorporated
by reference to Exhibit 10h to the Company's Form
10-K for the fiscal year ended December 31, 1992
(File No. 1-5491).
(1) 10i Pension Restoration Plan of LeTourneau, Inc
incorporated by reference to Exhibit 10j to the
Company's Form 10-K for the fiscal year ended
December 31, 1994 (File No. 1-5491).
32
EXHIBIT INDEX
Page 3 of 4
FOOTNOTE EXHIBIT
REFERENCE NUMBER EXHIBIT DESCRIPTION
- ----------- ------- -----------------------------------------------------
(1) 10j Credit Agreement dated September 22, 1986 (including
amendatory letter dated March 25, 1987) and First
Preferred Ship Mortgage dated November 7, 1986
between the Company and Marathon LeTourneau Company
incorporated by reference to Exhibit 10c to the
Company's Form 10-K for the fiscal year ended
December 31, 1986 and amendatory letter dated
February 21, 1992 incorporated by reference to
Exhibit 10h to the Company's Form 10-K for the
fiscal year ended December 31, 1991 (File No.
1-5491).
(1) 10k Participation Agreement dated December 1, 1984
between the Company and Textron Financial
Corporation et al. and Bareboat Charter dated
December 1, 1984 between the Company and Textron
Financial Corporation et al. incorporated by
reference to Exhibit 10c to the Company's Form 10-K
for the fiscal year ended December 31, 1985 (File
No. 1-5491).
(1) 10l Participation Agreement dated December 1, 1985
between the Company and Eaton Leasing Corporation
et. al. and Bareboat Charter dated December 1, 1985
between the Company and Eaton Leasing Corporation
et. al. incorporated by reference to Exhibit 10d to
the Company's Form 10-K for the fiscal year ended
December 31, 1985 (File No.1-5491).
(1) 10m Corporate Continuing Guaranty dated December 31,
1986 between Shearson Lehman Brothers Holdings Inc.
and the Company incorporated by reference to Exhibit
10h to the Company's Form 10-K for the fiscal year
ended December 31, 1986 (File No.1-5491).
(1) 10n Corporate Continuing Guaranty dated September 10,
1987 between Shearson Lehman Brothers Holdings Inc.
and the Company incorporated by reference to Exhibit
10i to the Company's Form 10-K for the fiscal year
ended December 31, 1987 (File No.1-5491).
(1) 10o Cross-Border Corporate Continuing Guaranty dated May
29, 1991 between Citicorp and the Company's
wholly-owned subsidiary, Rowan International, Inc.
incorporated by reference to Exhibit 10o to the
Company's Form 10-K for the fiscal year ended
December 31, 1991 (File No. 1-5491).
(2) 10p Amendment No. 2 dated April 1, 1995 to the
Consulting Agreement dated March 1, 1991 between the
Company and C. W. Yeargain.
(2) 10q Consulting Agreement as amended dated March 1, 1991
between the Company and C. W. Yeargain.
(1) 10r Acquisition Agreement dated as of November 7, 1991,
among KLM Royal Dutch Airlines, Blue Yonder I B.V.,
KLM Helikopters B.V. and Rowan Aviation
(Netherlands) B.V. incorporated by reference to
Exhibit 28.1 to the Company's Current Report on Form
8-K dated November 7, 1991 (File No. 1-5491).
33
EXHIBIT INDEX
Page 4 of 4
FOOTNOTE EXHIBIT
REFERENCE NUMBER EXHIBIT DESCRIPTION
- ------------ -------- -----------------------------------------------------
(1) 10s Business Loan Agreement dated January 27, 1993
between Key Bank of Alaska and the Company's
wholly-owned subsidiary, Era Aviation, Inc.
incorporated by reference to Exhibit 10s to the
Company's Form 10-K for the fiscal year ended
December 31, 1992 (File No. 1-5491).
(1) 10t Asset Purchase Agreement dated as of November 12,
1993, among Rowan Companies, Inc., Rowan Equipment,
Inc., General Cable Corporation, Marathon LeTourneau
Company, Marathon LeTourneau Sales & Service Company
and Marathon LeTourneau Australia Pty. Ltd.
incorporated by reference to the Company's Current
Report on Form 8-K dated February 11, 1994 (File No.
1-5491).
(2) 10u Asset Purchase and Sale Agreement dated December 5,
1995 between Era Aviation, Inc. and Columbia
Helicopters, Inc., Alaska Helicopters, Inc. and
BIJOS Enterprises.
(3) 11 Computation of Primary and Fully Diluted Earnings
(Loss) Per Share for the years ended December 31,
1995, 1994 and 1993 appearing on page 26 in this
Form 10-K.
(4) 13 Annual Report to Stockholders for fiscal year ended
December 31, 1995.
(2) 21 Subsidiaries of the Registrant as of March 29,
1995
(2) 23 Independent Auditors' Consent.
(2) 24 Powers of Attorney pursuant to which names were
affixed to this Form 10-K for the fiscal year ended
December 31, 1995.
(2) 27 Financial Data Schedule for the year ended December
31, 1995.
__________________________________________
(1) Incorporated herein by reference to another filing of the Company with
the Securities and Exchange Commission as indicated.
(2) Included herein.
(3) Included in Form 10-K on page 27.
(4) Included herein. See ITEM 1, ITEMS 5-8 and Subpart (a)1. of ITEM 14.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K on pages
20 through 23 on Form 10-K for specific portions incorporated herein by
reference.